TAIPEI: Taiwan's central bank and finance ministry pledged yesterday to stabilise the financial markets as the island tries to defuse a crisis over last weekend's disputed presidential election.
The central bank said in a statement it was ready to intervene in the currency market to ensure dynamic stability''. It noted that volume in the market had returned to normal after a huge rise on Monday.
Financial markets have been seriously spooked by the political turmoil after Saturday's vote. President Chen Shui-bian won with a victory margin of less than 1%, and his challenger, Lien Chan, has demanded a recount.
Hundreds of protesters have camped out in front of the Presidential Office, and political parties have not agreed how to do a prompt re-tally of the votes. If they go through the courts, the process could drag out for months.
Central bank governor Perng Fai-nan told lawmakers the central bank had adequate liquidity to deal with any situation.
Asked whether the New Taiwan dollar might remain under pressure from outflows of foreign funds, he replied that there had been a net foreign fund inflow of US$48mil into Taiwan on Tuesday. He didn't elaborate.
The finance ministry said in a statement it had taken needed steps to stabilise the stock market. The steps were:
·Strengthening monitoring of stock trade;
·Encouraging companies to buy back shares. Finance Minister Lin Chuan told parliament that 26 companies have plans to do this;
·Asking companies to fully disclose financial information so that investors can be confident of understanding their condition;
·Cracking down on the spreading of rumours in the market. The ministry didn't say how it would accomplish this; and
·Asking the proprietary trading departments of local brokerages to fill their market adjustment function''. The ministry didn't elaborate, but the statement appears to mean it wants the brokerages to buy stocks offered by panicked local individual investors.
The finance minister also told lawmakers that the National Stabilisation Fund would act in the market when needed to prevent any excessive falls due to political worries. AP